A successful business will need to eventually expand two new offices. A successful landlord may want to add more apartment buildings to their portfolio. Investing in commercial real estate is done so with the expectation that there is some profit and it. Though it’s generally considered a safer form of investing, corporate strategist Maarten de Jeu knows that there are many things that go into real estate investment at this level to avoid certain risk factors and increase the potential for returns.
In the case of commercial real estate, revenue either comes from waiting for the property value to increase over time or renting. Whatever avenue is chosen, many investors prepare for eventual renovations by fixing things like lighting, addressing cosmetic concerns by painting and replacing certain fixtures, and getting new appliances to increase that value or raise the rent.
These are tactics applicable to corporate and residential properties, but de Jeu points two key differences between the two. When looking at commercial properties, for instance, renovations proved to be more challenging, both in cost and labor. This makes for fewer competitors, but the investment is generally higher. Rent is also higher in commercial properties due to longer leases, and that high price contributes to taxes, insurance, and general upkeep that might not occur in residential buildings.
So, how do investments like these get started?
For de Jeu, all business is dependent on interpersonal relationships. More important than knowing certain figures, investors need to know how to relate to people and make them more open to collaboration. As investments get more pricey, the number of people investors will have to reach to in order close on a property will increase.
Networking is an ideal solution to this. Such events bring new investors to the local players in real estate, and de Jeu says that the relationships formed here serve many business purposes. In time, with enough experience and name recognition, de Jeu suggests hosting your own events. It’s an opportunity to curate the guest list, decide which relationships deserve further investment and establish new ones.
These relationships will pay off in, de Jeu notes, but only if an investor can display their bona fides. Being informed about a property, the current state of the market and the local area help an investor make the right decisions and decide who to reach out to for assistance when needed. The building that network of professional allies will help an investor further consider the value of an investment, the potential risk their taking on, and how to proceed.
Those risk assessments will comprise the physical area of the property, damages, potential renovations, area value, and other factors that only be determined by attending open houses, surveying a neighborhood, and consulting projections concerning property value.
Comparables will demystify purchasing decisions some times, de Jeu says. This is data that looks at the property in similar areas and of a similar size and use it to see how far a deal an investor is getting.
Whether residential or commercial, real estate is investors’ dream because it promises steady and high returns. not to mention it’s a good asset for any portfolio. De Jeu, however, wants investors to be cautious in their approach, take risk assessments seriously, plan within their financial means, and make the right friends to better secure investments that pay off. Learn more: https://www.crunchbase.com/person/maarten-de-jeu
About Maarten de Jeu:
Maarten de Jeu is a corporate development strategist known in Europe and North America. Holding an MBA from the University of Oxford, de Jeu was recruited by Aviva plc as a Director of Strategy and Corporate Development. Success there brought him back to London to serve as their International Strategy Manager. When it was time for a change, de Jeu want to TVDK Management Consultants, allowing him the opportunity to guide corporations like Heinz, ING, and Sara Lee through complicated international expansion projects. He’s also the founder of SVM Business Advisory in Chicago, extending his business experience to growing businesses looking to follow in his footsteps.